Anthem 2Q16 Earnings Call Notes

Anthem (ANTM) Joseph R. Swedish on Q2 2016 Results

39.8m members

“Within membership, both fully insured and self-funded membership are tracking ahead of expectations as we ended the second quarter with nearly 39.8 million members. This reflects growth of an additional 148,000 lives during the quarter, bringing our year-to-date enrollment growth to 1.2 million lives, or 3%.”

We’ve been active participants in the exchanges

“We’ve been a very active participant in the exchanges from the very beginning, and recognize the markets have taken longer than expected to stabilize, and we’ve stated that repeatedly, and I think we’ve been working very closely with the administration and conducting our own modeling to best judge how we’re going to continually engage year-over-year in as profitable a context as possible. It’s interesting to reflect back at the end of the first quarter, we told you that – end of June 30, we’d probably have greater insight into the membership we’ve captured, recognizing that we had a substantial uptick in membership. It deteriorated a little bit at the end of Q2 to around 925,000 or so members.”

We’ve noticed that we’re dealing with a lot of chronic illnesses on the exchanges

“But what we’ve observed in terms of the intensity of illness is that as, John pointed out in his earlier remarks, we’re dealing with some chronic illnesses like cardiac, diabetes, COPD, we’ve had what we think is a material uptick in dialysis cost that have hit us. So we’re going through an appraisal of all of that in terms of how to better medically manage those members as well as begin pricing it into 2017. That’s the trick. I think John has stated it and I’ll restate it. We believe we’re well positioned for pricing in 2017 given what we now know about the membership we’ve captured. And so, I guess, when you put all that together, what we’re waiting for now is rate approvals by state, and I can assure you that we’re going to be extremely prudent in our continuing engagement.”

John E. Gallina – Chief Financial Officer & Executive Vice President

One thing that would accelerate stabilization of exchanges would be to eliminate the health insurer tax

“Other things that would certainly help the acceleration of the stabilization would be to eliminate the health insurer tax beyond 2017. The risk adjuster model, it does a lot of what it’s intended to do, but quite honestly, there’s a bit of an imbalance that it overcharges for healthy and over-reimburses for certain moderately unhealthy disease states.”